Ebang follows through with plans for US-based IPO

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Canaan Creative was the first digital currency processing equipment manufacturer to be listed as a publicly-traded company in the United States when it launched its initial public offering (IPO) in late 2019. It beat rival Bitmain to the punch, but is about to have some competition. 

After announcing last December that it would file for an IPO in the U.S., China-based Ebang has followed through on its promise, filing with the Securities and Exchange Commission (SEC) for an IPO last Friday. 

Ebang is confident that it can attract as much as $100 million through its IPO, according to its SEC F-1 form. It will offer Class A ordinary shares at a value of $0.00013 each, looking to grab a spot under the ticker EBON on either the NYSE or the Nasdaq Global Market. The initiative is being underwritten by U.S.-based Loop Capital Markets LLC, as well as AMTD Global Markets Limited out of Hong Kong. 

Ebang, like Canaan, wanted to go public on the Hong Kong Stock Exchange (HKSE) a couple of years back. However, also like Canaan, those plans fell through. The exchange rejected the IPO proposal, citing the company’s failing financial health as one of the reasons. 

That health hasn’t gotten any better. In 2018, it saw revenue of $319 million and gross profit of $24.4 million; in 2019, its revenue was just $109 million, and it reported a gross loss of $30.6 million. Not a good sign heading into the BTC halving in a little over a week which is expected to be a blood bath for BTC block reward miners.

It cited the price of BTC has one of the major factors of its weaker performance, explaining, “The decrease in the [BTC] price in 2018 and the first quarter of 2019 resulted in a material decrease in our sales volume and in the average selling price of our [BTC] mining machines. Although the [BTC] price started to recover in the second quarter of 2019, our operations generally lag behind the increase of [BTC] price, and we recorded a revenue of US$109.1 million in 2019.”

Since the coronavirus is impacting supply lines, Ebang predicts this year could be a slower year, as well. It adds in its filing, “We and our customers have experienced significant business disruptions and suspension of operations due to quarantine measures to contain the spread of the pandemic, which may cause shortage in the supply of raw materials, reduce our production capacity, increase the likelihood of default from our customers and delay our product delivery.”

Ebang will has a tough road ahead of it just like when Canaan. The rival company is now looking at a possible class-action lawsuit over allegations that it misrepresented its financial stability in its IPO filing, and has seen its stock price fall by about 53% since the company went public. Although it had expected to attract around $400 million through the IPO, it ultimately had to settle for just $100 million.